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Idcol Cement Ltd., Represented By Its ... vs Fuller India Ltd. And Anr. on 27 January, 1998 cites

Svenska Handelsbanken vs Indian Charge Chrome (Dayal, J.) on 15 October, 1993

The same question came up for consideration before this Court in Svenska Hamdelshankan v. Indian Charge Chrome this Court once again reiterated that a confirmed bank guarantee irrevocable letter of credit cannot be interfered with unless there is established fraud or irretrievable injury has to be of the nature noticed in the case of Itak Corporation v. First National Bank of Boston. On the question of fraud this Court confirmed the observations made in the case of U.P. Co-op. Federation Ltd. and stated that the fraud must be that of the beneficiary, and not the fraud of anyone else.
Supreme Court of India Cites 14 - Cited by 179 - Y Dayal - Full Document

Larsen & Toubro Limited vs Maharashtra Stateelectricity Board & ... on 13 September, 1995

15. Our attention was invited to a number of decisions on this issue - among them, to Larsen and Toubro Ltd. v. Maharashtra State Electricity Board, and Hindustan Steel Workers Construction Ltd. v. C.S. Atwal & Co. (Engineers) (P) Ltd., the latest decision is in the case of State of Maharashtra v. National Construction Co. where this Court has summed up the position by stating : (S.C.C. p.741, para 13) The rule is well established that a bank issuing a guarantee is not concerned with the underlying contract between the parties to the contract. The duty of the bank under a performance guarantee is created by the document itself. Once the documents are in order the bank giving the guarantee must honour the same and made payment ordinarily unless there is an allegation of fraued or the like. The courts will not interfere directly or indirectly to withhold payment, otherwise trust in commerce internal and international would be irreparably damage. But that does not mean that the parties to the underlying contract cannot settle the disputes with respect to allegations of breach by resorting to litigation or arbitration as stipulated in he contract. The remedy arising ex contractu is not barred and the cause of action for the same is independent of enforcement of the guarantee.
Supreme Court of India Cites 4 - Cited by 76 - J S Verma - Full Document

U.P. State Sugar Corporation vs M/S. Sumac International Ltd on 4 December, 1996

Numerous decisions of this Court rendered over a span of nearly two decades have laid down and reiterated the principles which the courts must apply while considering the question whether to grant an injunction which has the effect of restraining the encashment of a bank guarantee. We do not think it necessary to burden this judgment by referring to all of them. Some have been considered and reiterated are Svanske Handelsbanken v. Indian Charge Chrome , Larsen & Toubro Ltd. v. Maharashtra State Electricity Board , Hindustan Steel Workers Construction Ltd. v. C.S. Atwal & Co. (Engineers) (P) Ltd. and U.P. State Sugar Corporation v. Sumac International Ltd. . The general principles which has been laid down by this Court has been laid down by this Court has been summarised in the case of U.P. State Sugar Corporation, as follows : (S.C.C. P.574, para 12) The law relating to invocation of such bank guarantees is by now well settled. When in the course of commercial dealing an uncondition bank guarantee is given or accepted, the beneficiary is entitled to realize such a bank guarantee in terms thereof irrespective of any pending disputes. The 'bank giving such a guarantee is bound to honour it as per its terms irrespective of any dispute raised by its customer. The very purpose of giving such a bank guarantee would otherwise be defeated. The courts should, therefore, be slow in granting an injunction to restrain the realization of such a bank guarantee. The courts have carved out only two exceptions. A fraud in connection with such a bank guarantee would vitiate the very foundation of such a bank guarantee. Hence if there is such a fraud of which the beneficiary seeks to take the advantage, he can be restrained from doing so. The second exception relates to cases where allowing the encashment of an unconditional bank guarantee would result in irretrievable here or injunction to me of the parties concerned. Since in most cases payment of money under such a bank guarantee would adversely affect the bank and its customer at whose instance the guarantee is given, the harm or injustice contemplated under this head must be of such an exceptional and irretrievable nature as would override the terms of the guarantee and the adverse effect of such an injunction on commercial dealings in the country.
Supreme Court of India Cites 11 - Cited by 385 - S V Manohar - Full Document
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